Mixed-use properties, meaning buildings that combine commercial premises with residential accommodation, are a familiar feature of the UK’s towns and high streets. The flat above the shop, the office with a caretaker’s dwelling, the converted warehouse with a ground-floor retail unit: these are common arrangements, and they attract buyers ranging from small investors to established property businesses.
Since 1 May 2026, anyone owning or acquiring such a property has needed to understand that the residential element is now governed by a significantly reformed legal framework. The Renters’ Rights Act 2025 introduced the most fundamental changes to residential tenancy law in England in almost 40 years. For mixed-use property owners, the Act does not exist in isolation. It sits alongside the commercial lease regime and impending changes to energy performance standards, creating a legal picture that requires careful attention.
This article applies to England. While certain provisions of the Act extend to Wales, the position there differs in some respects, and separate advice should be sought for Welsh properties.
What the Renters’ Rights Act 2025 has changed
The Act received Royal Assent on 27 October 2025, with its principal tenancy reforms coming into force on 1 May 2026. The reforms are sweeping and apply to assured and assured shorthold tenancies in the private rented sector.
The key changes are as follows. Assured shorthold tenancies, commonly known as ASTs, have been abolished. Existing ASTs, including fixed-term agreements that were still running on 1 May 2026, have converted to assured periodic tenancies. These are open-ended, rolling agreements with no fixed end date. No new fixed-term assured tenancies can now be granted.
Separately, the right of landlords to recover possession by serving a Section 21 “no fault” notice has been removed. A landlord wishing to recover possession must now rely on one of the specified grounds set out under Section 8 of the Housing Act 1988, as amended.
For tenants, this represents considerably enhanced security of tenure. They may terminate at any time on two months’ notice, but the landlord’s ability to bring the tenancy to an end is now tied to proving a specific ground, such as persistent rent arrears, antisocial behaviour, or a genuine intention to sell or occupy the property. Crucially for mixed-use situations, a landlord cannot use the commercial arrangements governing one part of a building to sidestep the residential regime applying to another.
The particular challenge of mixed-use property
The mixed-use nature of a property introduces a complication that catches some owners off guard. Two distinct statutory frameworks may govern the building at the same time, and they do not align.
The commercial element of a mixed-use property, whether it is a shop, office or workshop, is typically governed by the Landlord and Tenant Act 1954. This legislation provides business tenants with security of tenure in their own right, subject to specific grounds for ending the lease.
However, the 1954 Act and the Renters’ Rights Act operate independently. A landlord cannot, for example, seek to end a residential tenancy on the basis that it is commercially inconvenient, nor can the terms of a commercial lease override the protections the Act confers on a residential occupier elsewhere in the same building.
This matters most acutely where a buyer acquires a mixed-use property with a view to future redevelopment, vacant possession, or consolidating the building for a single use. Any such plan must now account for the fact that a residential tenant in the building has stronger rights than before. Gaining possession, even where the commercial lease permits it, will not automatically extend to the residential element. Attempting to apply pressure on a residential tenant in ways that fall outside the Section 8 grounds could expose the landlord to significant legal liability.
EPC compliance: two regimes, two timelines
Energy Performance Certificate requirements add a further layer of complexity for mixed-use property owners, because the residential and commercial parts of the building are subject to separate regulatory frameworks, each on its own trajectory.
For the residential element, the government has confirmed that all private rented properties in England and Wales will be required to meet a minimum EPC rating of C from 1 October 2030. This is a significant uplift from the current minimum of Band E.
The EPC assessment methodology itself is also being overhauled. The government intends to introduce new-style domestic EPCs, based on the Home Energy Model, from October 2026, with the new system proposed to become compulsory for assessments from October 2029. The detail of how the new methodology will work is still subject to consultation, and final regulations have not yet been published.
The government has indicated its intention that landlords who secure an EPC C rating under the current system before October 2029 should be treated as compliant until that certificate expires, although this has not yet been confirmed in legislation. Those who have not done so by then are expected to be assessed against the new metrics, under which it may be harder to achieve the equivalent of a C rating.
Based on the proposed metrics under consultation, achieving the required standard under the new system may, in many cases, require more substantial energy efficiency works, potentially including measures such as heat pumps or solar panels. The final requirements will depend on the outcome of the government’s consultation and the regulations that follow.
For the commercial element, the position is less settled. Commercial properties are currently required to achieve a minimum of Band E under the Minimum Energy Efficiency Standards regime introduced under the Energy Act 2011. The government has signalled its intention to raise this to Band B by 2030, but the precise timeline and compliance windows for non-domestic property have not yet been legislated. Landlords of commercial premises should be aware that the trajectory points firmly upward and plan accordingly.
For a mixed-use property owner, the practical implication is that both the residential and commercial elements require separate EPC assessments and separate compliance planning. The two parts of the building may have different certificates, different ratings, and different deadlines. Conflating them, or assuming that a single EPC covers the whole building, is a common and potentially costly error.
For buyers: due diligence before you commit
If you are considering acquiring a mixed-use property, the legal and practical checks required go beyond those for a straightforward commercial purchase. The following points warrant particular attention.
Tenure of any residential occupant
Establish whether there is a residential tenant in occupation, when the tenancy was granted, and what its current terms are. Since 1 May 2026, most residential tenancies falling within the Act are now assured periodic tenancies under the new regime. The price and structure of the deal should reflect this.
Possession requirements
If vacant possession of the residential element is important to your plans, for example for redevelopment, conversion or owner-occupation, take advice on what Section 8 grounds might realistically be available and on what timescale. There is no quick route to possession under the new regime unless a qualifying ground can be established.
Section 21 notices
No new Section 21 notices can now be served. However, if the seller served a valid Section 21 notice before 1 May 2026, there may still be a short transitional window in which possession proceedings can be issued.
This should be checked carefully. Any such notice can only be used to start court proceedings up to and including whichever date comes first: the date on which the notice expires, or 31 July 2026. If proceedings have not been issued by the relevant deadline, the notice will cease to provide a route to possession.
For buyers, this is particularly important where vacant possession is central to the deal. You should establish whether a notice was served, whether it was valid, whether proceedings have already been issued, and what impact this has on timing, value and risk.
Renters’ Rights Act Information Sheet
Most landlords and letting agents were required to give tenants the Renters’ Rights Act Information Sheet by 31 May 2026. Buyers should ask whether the seller has complied with this requirement, as failure to do so may create enforcement risk and may indicate wider compliance issues in the management of the residential element.
Where a valid Section 21 or Section 8 notice was served before 1 May 2026 and the tenancy has not yet fully transitioned because proceedings remain live, further rules may apply once the notice is no longer valid or the court process has concluded. This should be reviewed as part of due diligence.
EPC ratings
Obtain separate EPCs for the residential and commercial elements and review both against the upcoming compliance timelines. Where either part falls short of the anticipated future minimum, factor upgrade costs into your pricing.
Structure of the deal
Consider how the property is being sold, whether as a single freehold, with or without existing leases, and whether there are any overage or clawback provisions tied to future changes of use. The interplay between the commercial and residential elements should be addressed clearly in the heads of terms and the sale contract.
Your solicitor will be able to raise enquiries of the seller covering many of these points, but the more prepared you are before those enquiries are raised, the better placed you will be to negotiate effectively and avoid surprises after exchange.
For existing owners: taking stock now
If you already own a mixed-use property with a residential element, the 1 May 2026 commencement date has now passed, so the focus should be on compliance under the new regime.
On the residential tenancy, consider whether the existing arrangements still work for you. If you had previously relied on the ability to serve a Section 21 notice as a backstop, that route is no longer available for new notices. Possession will need to be considered through the Section 8 grounds, with evidence to support any ground relied upon.
If you served a valid Section 21 notice before 1 May 2026, take urgent advice on the transitional position. There is only a limited period in which such notices may still be capable of supporting possession proceedings, and the longstop date of 31 July 2026 should not be overlooked.
You should also check whether the Renters’ Rights Act Information Sheet was provided by the 31 May 2026 deadline and whether any further written information requirements apply to your tenancy arrangements.
On the commercial element, review the terms of any existing lease against the 1954 Act framework. If a lease renewal is approaching, be aware that the terms you agree now, including any break clauses and redevelopment provisions, will need to be considered in light of the fact that the residential part of the building is now subject to a more restrictive regime.
On energy performance, commission assessments for both parts of the building if current EPCs are approaching expiry or if you have not reviewed them recently. For the residential element in particular, it is worth understanding where you stand against the confirmed Band C target for 2030, and against the proposed 2029 transition to the new assessment methodology. Leaving compliance works to the last moment may increase cost and reduce the range of practical options available.
Getting the right advice
The Renters’ Rights Act 2025 represents a significant shift in the legal landscape for anyone involved in residential property, but its implications for mixed-use property are particularly layered. The interaction between the residential tenancy regime, the commercial lease framework, and the evolving EPC requirements creates a set of issues that benefit from specialist legal advice rather than a one-size-fits-all approach.
For buyers, the key is to understand exactly what is being acquired and what rights any residential occupier now has. For existing owners, the priority is to review compliance, possession strategy and future plans in light of the reforms now in force.
Taking advice early can help identify risks before they become expensive obstacles.
About the author
Brinda Granthrai joined RIAA Barker Gillette (UK)’s commercial real estate team in May 2025. She brings over 15 years of experience advising high-net-worth individuals, private companies and international investors on complex real estate transactions. She works closely with the team to deliver commercially focused, pragmatic solutions across the full property lifecycle.